Those who invested in Sunlands Technology Group (NYSE:STG) a year ago are up 132%
The last three months have been tough on Sunlands Technology Group (NYSE:STG) shareholders, who have seen the share price decline a rather worrying 31%. But that doesn't change the fact that the returns over the last year have been very strong. We're very pleased to report the share price shot up 106% in that time. So we think most shareholders won't be too upset about the recent fall. The real question is whether the business is trending in the right direction.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Sunlands Technology Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Sunlands Technology Group was able to grow EPS by 189% in the last twelve months. This EPS growth is significantly higher than the 106% increase in the share price. Therefore, it seems the market isn't as excited about Sunlands Technology Group as it was before. This could be an opportunity. The caution is also evident in the lowish P/E ratio of 1.18.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Sunlands Technology Group's earnings, revenue and cash flow.
What About The Total Shareholder Return (TSR)?
We've already covered Sunlands Technology Group's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that Sunlands Technology Group's TSR, at 132% is higher than its share price return of 106%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's good to see that Sunlands Technology Group has rewarded shareholders with a total shareholder return of 132% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 14% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Sunlands Technology Group has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.
Of course Sunlands Technology Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
